LinkedIn Posts 3Q Loss, Revenue Growth Accelerates
LinkedIn suffered its first quarterly loss since its initial public offering roused Wall Street a few months ago.
The setback, announced Thursday, wasn't as severe as analysts anticipated. The online professional networking service invested in an expansion aimed at changing the way people find jobs and advance their careers.
LinkedIn Corp. absorbed a loss of $1.6 million, or 2 cents per share, in the July-September as it invested more money to expand. That contrasted with earnings of $4 million, or 2 cents per share, at the same time last year.
If not for items unrelated to its ongoing business, LinkedIn said it would have earned 6 cents per share. On that basis, analysts polled by FactSet had expected LinkedIn to break even.
Revenue more than doubled from last year to $139 million — about $11 million higher than analysts forecast.
It wasn't enough to lift a stock that has been flying high since LinkedIn's stock market debut nearly six months ago. The company's shares shed $5, or 5.7 percent, to $82.50 in Thursday's extended trading.
After LinkedIn shares were priced at $45 in the initial public offering, they quickly doubled. Investors' rabid response sparked a debate about whether another investment bubble is forming around rapidly growing Internet companies, similar to what happened in the late 1990s when a dot-com boom set the stage for a costly meltdown.
Unlike the Internet startups of the 1990s, LinkedIn had been consistently generating profits.
The increasing spending that triggered the third-quarter loss appeared to yield dividends.
Besides producing impressive revenue growth, LinkedIn added 15.4 million more accounts in the quarter to end September with 131.2 million members. That may have been a slight letdown for investors, though, because LinkedIn Jeff Weiner had indicated the company was on a pace that would result in 132 million members at the end of the quarter.
LinkedIn doesn't charge people to post their resumes, but attracting more members is important because a bigger audience makes the service more compelling to employment recruiters and advertisers.
The company, based in Mountain View, California, gets more than two-thirds of its revenue from fees it charges companies, recruiting services and other people who want broader access to the profiles and other data on the company's website. The rest comes from advertising.